This is the final entry in a Microgrid Knowledge Special Report series focused on distributed energy management systems (DERMS) and virtual power plants (VPPs). The sixth installment provides an overview of the path to efficient management of distributed resources, from VPPs to grid control with DERMS.
For utilities that see an increasing amount of DERs connected to their grids, what is the best strategy to most effectively manage these new energy resources? Software management systems, including VPPs and DERMS, allow real-time control of these resources to balance both electricity generation and demand on the power grid. But there are important differences in how these two platforms aggregate and control distributed grid resources.
“While DERMS provide the highest degree of grid control, regulatory and technical challenges may make it difficult for utilities to transition to these systems all at once, especially where a market-based compensation is mandated,” says Eric Young, vice president, industry solutions for Enbala. For this reason, VPPs provide a logical first step in the management of distributed resources.
VPPs can perform a variety of functions, such as system-wide calls for increased/ decreased generation or load shedding, energy trading, capacity relief, frequency regulation, replacement reserves and ancillary services.
Virtual power plants provide entry into the world of network orchestration
VPPs typically provide benefits to the grid by aggregating assets over an entire region or service territory. For example, the wide collection of generation resources in a VPP can be aggregated and presented to the utility or grid operator as one dispatchable resource. VPPs can perform a variety of functions, such as system-wide calls for increased/decreased generation or load shedding, energy trading, capacity relief, frequency regulation, replacement reserves and ancillary services. These functions are not dependent on the location of particular grid assets such as transformers or feeder lines.
“VPPs make use of existing energy markets for signals, whether via automatic generation control or price signals, and are very easily integrated to new market constructs where the durations of events are growing and/or notification time decreasing (or absent),” says Young.
The difference with DERMS
In contrast to VPPs, DERMS are much more location based, and are crucial when the utility needs to fully integrate distributed resources into the electrical distribution system. The DERMS software can simultaneously manage thousands of assets on different parts of the distribution system based on local conditions to those assets. In this way, the utility knows exactly which assets have been controlled to address problems throughout the distribution network. A VPP does not provide this fine-grain control of the grid; it doesn’t have this degree of granularity. With DERMS, the utility knows exactly where each asset is located — on which specific transformer or feeder. When there’s a grid event, the utility’s DERMS can mitigate problems by controlling devices, such as smart inverters, as well as more traditional distribution control equipment.
Voltage profiles on feeders can be easily managed with DERMS since these systems can increase load on one part of a feeder while decreasing load (increasing generation) on another part of the same feeder.
The DERMS can perform advanced operations such as distribution system optimization, coordinated resource utilization and voltage and power management. In short, a DERMS platform is the ultimate step toward the holistic control of grid resources.
It’s important to recognize, however, that DERMS require larger up-front costs. Utilities may need to install telemetry equipment and integrate the DERMS with DMS. The DMS provides information about grid assets and their topology and, combined with DERMS, gives utilities and grid operators unprecedented control over the power grid.
With DERMS, the utility can manage both real power (watts) and reactive power (VARs) on the distribution lines. Voltage profiles on feeders can be easily managed with DERMS since these systems can increase load on one part of a feeder while decreasing load (increasing generation) on another part of the same feeder. They can also bias the reactive power of DER to manage voltage. This advanced control of the distribution network is not possible with VPPs.
Making a smooth transition from VPPs to DERMS
From a regulatory and technical standpoint, VPPs are significantly easier to implement than DERMS. Therefore, VPPs are typically the first step for a utility to begin managing increasing numbers of DERs on the grid. For example, to begin unlocking the benefits of DERMS, utilities need a fairly accurate representation of the distribution system, including the location of all assets and how they are interconnected within the feeder lines. However, utilities can use a less detailed grid representation as the foundation to begin the VPP-to-DERMS path.
By managing demand response with the VPP, operators can begin to not only utilize, but trust, the capabilities of the VPP.
How can utilities best begin thinking about using VPPs in their existing markets?
“As a first step, they can enter wholesale capacity markets. Historically the wholesale operations [unregulated] and the distribution operations [regulated] parts of a utility rarely mix,” says Young.
By managing demand response with the VPP, operators can begin to not only utilize, but trust, the capabilities of the VPP. Traditional demand response, including customer load shedding, can be effective but has limited capacity to regulate the grid. VPPs can be applied to demand response markets to allow the grid to shed load and increase generation in an automated way through active control systems.
If DERMS becomes necessary when grid systems can no longer appropriately manage power and current from large numbers of DERs, the operator can start from a place of confidence in the technology that enables the DER control. This may also help utilities recognize the need for DERMS before they begin scrambling to find a solution to unexpected growth.
The best approach for utilities is to take incremental steps in adopting a DERMS platform. Utilities don’t need to make this transition all at once. Making the transition is like buying products with a minimum of features, becoming familiar with their operation, then adding capabilities to improve performance.
“Utilities can convert VPP assets to a DERMS platform down the road and use them as regulations change and new markets open up,” says Young. For example, depending on the direction of the regulatory market, utilities will be able to use VPP assets for DERMS when they need them, and when they don’t, utilize them in the capacity market.
This phased approach provides utilities with a viable path from VPPs to DERMS that has high value and low initial investment costs. The process begins when an asset is initially brought into a VPP. At this time, certain parameters and capabilities are configured. At a later time, when the utility decides to enable the asset within the DERMS platform, the asset enablement and configuration is already waiting. This allows the DERMS project to carry lower economic risk. The existing asset base is a strong indicator of the value the DERMS can provide in both the near- and long-term.
Without a VPP, building and running DERMS is still possible, but the commissioning and enablement costs may be larger at the start of the project than if a VPP were already in place, and the overall project risk may be greater until confidence and experience with the technology increases within utility walls.
VPPs provide the ideal foundation for utilities to gain experience with managing and optimizing the increasing amount of DERs coming onto the electrical grid. The migration path from VPPs to DERMS provides a logical and balanced approach for utilities to gain greater control of new distributed energy resources such as solar, wind and battery storage, which are transforming power networks.
The Microgrid Knowledge Special Report series will also cover the following topics over the coming weeks:
- The 21st Century Power Grid: Not Your Parents’ Power Grid
- Virtual Power Plants: Coming Soon to a Grid Near You
- DERMS: Next Generation Grid Management
- How DERMS and Smart Inverters Safely Bring Distributed Resources to the Grid
- Smoothing the Path for DER Orchestration: New Rules for a New World
Download the full report, “Creating a 21st Century Utility Grid with DERMS and VPPs,” courtesy of Enbala, to learn more about how these tools and more are changing the face of the 21st century power grid.